A report by IDFC Mutual Fund showed that sectoral rotation took place during the first and second halves of the last financial year.
Despite the sectoral rotation, metals stocks stood out throughout the year, as they outperformed in all the four quarters.
"Apart from that, significant sector rotation was seen from the first half of FY21 to the second half," it said.
In the first half, stable sectors like auto, IT and healthcare outperformed, while in the second half, cyclical sectors like capital goods, infrastructure, private and public sector banks outperformed.
The report indicated that the sectoral rotation may have just begun and may continue.
Further, noting that over the last three years, small caps and cyclical sectors have still underperformed, the report said, "outperformance in the current year of cyclical sectors is part of the catchup of the underperformance of the previous two years".
Despite the strong performance in the current year, cyclical sectors like PSU banks, telecom, auto, infra and metals continue to lag on a three-year basis, said the IDFC Mutual Fund report.